Q: My wife and I moved out of our home last year and rented it to a couple. The property has many upgrades and was in excellent condition when we moved out. The tenants are on a month-to-month lease and I just received their 30-day notice of moving out for the end of next month.
I knew they might have to move because of a job situation, but they tell me that they are not going to pay the last month’s rent. Instead, they want me to take the last month’s rent out of their cleaning deposit. The cleaning deposit really isn’t that much for such a nice home, but they claim that they will leave the house cleaner than it was when they moved in. Can they do that?
Also, when can I place my "for rent" sign on the property?
A: I can imagine that nearly every one of my readers who is a landlord knows the answer to this one and has had a tenant try to pull the same stunt. The answer is no. They can’t do it legally, as the "cleaning deposit" is to be used solely for cleaning and any damage beyond ordinary wear and tear.
Many years ago landlords would collect "first and last month’s rent plus a cleaning deposit" as the security deposit, and that is probably still in the minds of some renters. Or, more likely, some renters are just aware that many landlords will not object and will let the tenant essentially reduce the cleaning deposit by the equivalent of an entire month’s rent. In most circumstances, that will not leave you with much money in case they don’t leave the rental in immaculate condition.
So my advice is this: Don’t let your tenants do this without a fight. I would immediately contact them in writing and tell them that the "cleaning deposit" is to be used only for any cleaning or excessive damages upon move-out, not rent. Tell them that you will immediately serve them with a legal notice for the unpaid rent if the rent is not paid in full no later than the due date. Be sure to mention that you will also charge and collect late charges, and that you will turn over their file to a tenant-landlord attorney if the rent is not paid in full before the legal notice expires.
This should be enough to discourage them unless they really are determined to not pay the rent for some nefarious reason like they just don’t have the money. Of course, you need to be prepared to follow through if your tenants persist in this scheme to shortchange you on your cleaning deposit.
It sounds like this rental property is a large home and it can cost a lot to clean and repair damages, and you will want the full cleaning deposit to be available. The reality of today’s rental market in most areas is that cleaning and security deposits are already very low due to the economy and that means there is no extra money to cover the last month’s rent in most instances.
I understand that there are times when an honest tenant will truly leave the property in better condition than when he moved in, and that’s great. But the agreement was that the rent would be paid each and every month, including the last month. Then the entire cleaning deposit will remain available to be used or refunded as needed and as determined by inspecting the property after the tenant has vacated the property.
Over the years, I have received countless questions from inexperienced or "too nice" landlords who fell for this tenant ploy only to find that the tenant left the rental home or apartment in horrible condition. They would have been OK if they had the full cleaning deposit. But now they had only a pittance of the cleaning deposit left after agreeing to let the tenant deduct the last month’s rent. Then it is usually the case that the landlord is out of pocket to address the damage and cleaning needed beyond ordinary wear and tear with very little chance to ever recover their losses from the long-gone tenant.
While the final statement and disposition of the cleaning deposit will show that the tenant owes the landlord money, how easy is it to collect? It isn’t and it would likely have been unnecessary if the landlord had demanded the tenant not use the cleaning deposit to cover any rent. But you need to tell them in writing that you reject their proposal and will take immediate legal action if necessary and remind them that any legal expenses incurred will be charged to them. That should discourage most tenants from this tactic.
Your second question is straightforward; you can place your "for rent" sign in front of the property as soon as you have received the written notice of intent to vacate from your tenant. In most states, you also have the right to enter the rental unit upon proper notice to show the property to prospective renters or purchasers too.
Now there are some landlords who prefer to show the rental property only after the tenant has vacated and all of the turnover work has been completed so the rental really shows well. I generally agree that it is better to show the rental unit when it is vacant and rent-ready, but there can be times when you have a very responsible tenant who keeps the rental home or apartment in a condition that can be shown. In that case, you may be able to reduce the "downtime" or lost rent between tenants, which is always important.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and "Property Management Kit for Dummies" and co-author of "Real Estate Investing for Dummies."
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